David R. Henderson  

Boudreaux on Hayek

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One of the distinctions that Boudreaux and Hayek both stress is the one between law and legislation. Boudreaux illustrates this with three nice examples, two of law and one of legislation. On the law side, he tells a story that anyone who has ever parked at a shopping mall is probably familiar with. You are looking for a parking spot and see a car pulling out, so you turn on your blinker to signal that you are in line for that spot. Another driver, seeing that you are waiting, drives on to find a different parking spot. "In this everyday example," he writes, "you and the other driver are governed by law." You are widely recognized as having established for yourself "a temporary property right to that space." But that right is not written down anywhere and did not come about because of some committee. Rather, it "emerged, unplanned and unintended, in the course of human interactions."

His second example of law is the lex mercatoria, or the "Law Merchant." This evolved among merchants as international trade developed. When conflicts arose--usually because of differences in expectations--courts, staffed by merchants themselves, ruled on the conflicts. Moreover, no government enforced the courts' rulings. Concern about one's reputation was the "enforcer."

An example of legislation that Boudreaux gives is a provision in Massachusetts' criminal code that makes it a "criminal offense for two unmarried adults to have consensual sex with each other." Boudreaux writes that no police officer would arrest people who violated this legislation. Moreover, he writes, if some out-of-touch policeman and court did attempt to punish an unmarried couple for their "crime," the public "would regard the police officer and the court--not the couple--as having broken the law."

On his blog, Café Hayek, Boudreaux often emphasizes the distinction between law and legislation. The above examples crystallize the distinction well. (italics in original)

This is excerpted from my recently published review of Don Boudreaux's The Essential Hayek. Read the whole thing here. (Scroll down.)

I do have one criticism, not of Boudreaux's exposition, which is spot on, but of what he exposits: Hayek's view of the business cycle.

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COMMENTS (7 to date)
Greg G writes:

In my opinion, Hayek was a great economist and Don did a valuable service by pulling Hayek's most essential writing together from a very large total body of work.

I also thought that was a very well written review David. That said, I am quite surprised you chose to lead here with Hayek's failed attempt to redefine the meaning of "law." Hayek wants to reserve the meaning of the word for what most other people would simply describe as very strong social norms.

The irony is obvious here. Hayek and Boudreaux never tire of championing bottom up processes. Nothing is more genuinely bottom up than language conventions. All individuals decide for themselves what words they will choose to express their meanings and what meanings they will attach to the words of others.

The bottom up result here is that Hayek's attempt to redefine the way the word "law" is commonly used has been a spectacular failure.

BJG writes:

You have *one* criticism of Hayek's entire scholarly output?

Toby writes:

I tend to agree with Greg G here. The distinction made by Hayek is not terribly useful. I find Weber's distinctions to be somewhat more useful for understanding rule-following behavior.

I would also like to offer a counter-example where the distinction between "Law" and "Legislation" is not all that clear.

In many large (European) cities, my experience has been that pedestrians will routinely ignore traffic lights. They will cross when the light is red. They will cross when the light is green. Provided that they see no traffic is approaching, they will cross the street. Scarcely anybody would ever consider these individuals as breaking the law, yet when a police officer fines an individual for this behavior this fine is not considered by anyone as being against the law.

In terms of Don Boudreaux's parking example, this would be that everybody recognizes that by blinking the light you, driver #1, are entitled to that parking space to be vacated by driver #2, but nobody will consider it a violation of your property right if driver #3 swoops in and takes this spot.

In terms of Don Boudreaux's MA-criminal code example, it's the same story. Nobody would consider it against the law for two unmarried adults to have consensual intercourse with one another. However, nobody would consider it against the law if a police officers would arrest these two adulterers either and the court would convict them.

I believe that for Cannabis the same holds or held in the US? Legislation makes possession an offense, yet hardly anybody would consider at such without many being terribly outraged that you can be fined, arrested, and imprisoned for it.

The distinction between law and legislation is, therefore, of not much use to me. It doesn't help me a whole lot to understand these situations. Especially, if "Law" is considered to be above "Legislation".

Greg G writes:

It is worth remembering when considering this issue that English was a second language for Hayek. That's not something anyone would forget when hearing his accent but it's a bit less obvious in his written work.

Even so, this failed attempt to change the prevailing language convention was an anomaly. The rest of his work was refreshingly free of the attempts that libertarians sometimes make to smuggle their conclusions into redefinitions of everyday words.

I think that's one reason Hayek was so influential. He tended to use everyday definitions and assume that his ideological opponents had good intentions but failed to understand the consequences of the policies they promoted.

Toby writes:

@Greg G: Wouldn't the distinction between Law and Legislation be the distinction between Recht and Gesetz in Hayek's native Austrian (German)? I still think that the distinction would be not a terribly useful one to make.

What I am somewhat more puzzled by is why Hayek did not use the work of Weber here which he surely must have heard about instead of the superficial distinction between statutory and common law he learned from the English legal system.

Otherwise, I agree with you regarding Hayek. To me he was a social scientist first and a political philosopher second, even though a lot of his later work can be said to have been motivated by how he wanted the world to be.

Greg G writes:


I can't say because I don't speak German. It does make me wonder though, if the conventions in German might not be more congenial to this kind of distinction.

Per writes:

From the review:

Yet even if you don’t buy the extreme version of rational expectations, all you need for
the Austrian business cycle theory to break
down is that it gets harder and harder for
the central bank to fool people.

Is it really about fooling people? Businessmen know there will be a bust sooner or later. But the important question is of course when the bust will hit the economy. How many businessmen said in 2006 "We won't invest in X cause there will be a massive bust in 2008"?

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